The Indian stock markets showcased remarkable resilience and continued their record-breaking rally for the fifth consecutive session on Wednesday. With the Sensex breaching the historic 67000-mark and the Nifty crossing 19800 levels, investor optimism in the country’s economic prospects reached new heights.
During the trading session, the Sensex reached an all-time high of 67171.38, eventually closing at 67097.44, registering an impressive 0.45% gain. Simultaneously, the Nifty soared to intraday record highs of 19851.70 and ended the day at 19833.15, showcasing a substantial increase of 0.42%.
Shrikant Chouhan, head of research (retail) at Kotak Securities Ltd, attributed the ongoing record-breaking spree in the Indian stock market to multiple factors. Robust foreign fund inflows, promising growth prospects, favorable monsoon conditions, and stable corporate earnings have all played significant roles in fueling the bull run on Dalal Street. As a result, investor appetite for local stocks has surged, leading to the impressive performance of the markets.
The driving force behind the market rally was the banking and financial sectors, which witnessed significant gains. Additionally, consumer durable companies also experienced notable uptrends, largely influenced by the exceptional performance of Polycab Ltd.
Contributing to the rally were the energy, oil and gas, metals, pharma, and healthcare sectors, along with other sectoral indices that ended higher. The only sector that saw some profit booking was IT, with the IT index closing marginally down.
Furthermore, the positive global market setup and sustained foreign institutional investor (FII) inflows have bolstered the resilience of the Indian stock market. VK Vijayakumar, chief investment strategist at Geojit Financial Services, highlighted the crucial role played by the strength of the US economy in driving the global market rally. Contrary to earlier fears, the US economy has shown no signs of recession, contributing to the positive sentiment in global markets.
The recent corporate results from the US have also surpassed expectations, with bank earnings beating projections, and equities linked to companies developing and utilizing artificial intelligence capabilities driving the US markets.
In addition to the favorable global setup, continuous foreign fund flows have been a boon for the Indian markets. Foreign portfolio investors (FPIs) have remained buyers in 12 out of 13 trading sessions in July, investing ₹1,165.47 crore in the Indian markets on Wednesday. Conversely, domestic institutional investors (DIIs) have been sellers in nine out of 13 trading sessions, booking profits and selling ₹2,134.54 crore in the markets.
The benchmark 10-year yield remained steady at 3.8%, maintaining a positive outlook for FPI flows. However, the rupee weakened by 5 paise to 82.08 to a dollar, due to some rise in the dollar index from its lows. Market analysts are closely monitoring the movement of the dollar index for further cues.
As the earnings season gathers momentum, consensus estimates anticipate Nifty companies to register an impressive 25% year-on-year growth. The banking and auto sectors are expected to lead the uptick, with the pharma sector also likely to witness a rebound. Investors are eagerly following management commentaries and macroeconomic data for further insights.
As the markets continue their upward trend, Ajit Mishra, senior vice-president, technical research at Religare Broking Ltd, advises investors to focus on prudent stock selection, considering the overbought readings in the index, which may result in consolidation ahead. This cautious approach will help investors navigate the evolving market dynamics and capitalize on the prevailing bullish sentiment.
